Audit (A-06-06-00093)

Executive Summary

Ochsner Health Plan of Louisiana's (Ochsner) proposed uses of approximately $36 million of the $41 million estimated Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) payment increase in contract year 2004 for three plans were supported and allowable under the MMA. However, Ochsner's proposed uses of $4.7 million for one of the three plans were not allowable because, contrary to Centers for Medicare & Medicaid Services (CMS) instructions, these funds related to mandatory supplemental benefits. In addition, because of a clerical error, Ochsner overstated by an estimated $95,000 its proposed use of the payment increase to enhance benefits for another plan.

We recommended that Ochsner follow CMS instructions and guidance when preparing future proposals (now referred to as "bids") and ensure that amounts included in the proposals are allowable. In written comments on our draft report, Humana, Inc., which acquired Ochsner, did not agree that Ochsner's proposed uses of $4.7 million of the MMA payment increase for mandatory supplemental benefits were unallowable. Humana did not address our finding that Ochsner overstated proposed enhanced benefits by $95,000. Because Humana believed that Ochsner followed CMS guidance in preparing its revised proposal, Humana did not agree with our recommendation. Humana did not provide any additional information that would cause us to change our findings or recommendation.